PCC approves Avon buyout by The Body Shop maker

MANILA, Philippines — The Philippine Competition Commission (PCC) has given its clearance to the acquisition of Avon Products Inc. (Avon) by Natura Cosméticos S.A. (Natura) which is behind The Body Shop brand.

In its decision issued on Sept. 12, PCC found that Natura’s takeover of Avon is not seen to lead to reduced competition in the beauty and personal care products market as the two firms do not compete in the same segment.

The merger involves the creation of a new holding company, Natura Holding S.A. (Natura &Co), which will wholly own the shares of Natura and Avon.

Upon completion of the deal, Natura shareholders would gain approximately 76 percent of the interests in Natura & Co., while Avon shareholders will have approximately 24 percent of the interests in Natura & Co.

Natura & Co’s shares will be listed on the Novo Mercado segment of “B3” S.A.—Brasil, Bolsa, Balcão in São Paulo in Brazil.

In addition, Natura & Co will have American Depositary Shares listed on the New York Stock Exchange.

Avon which is a direct selling company of beauty, household, and personal care products, is based in New York in the US, while Natura Group which is also behind brands Natura Cosméticos and Aesop, is headquartered in São Paulo.

Apart from Natura and Avon catering to different consumer segments and having significant product price differences, PCC said the parties also do not share the same mode of distribution.

Both parties have expressed their intent to keep the current distribution business models after the transaction is completed.

In particular, Avon, which popularized the door-to-door cosmetic distribution, reported it would maintain the direct selling business model, while Body Shop would remain as a specialty store.

PCC in its review, also considered what consumers considered to be Body Shop’s list of competitors which are Lush, InnisFree and Kiehl’s, while Avon was found to compete with brands like Ever Bilena, Maybelline, Unilever and P&G.

“The transaction will not likely result in any substantial change in the market structure. Given the numerous beauty and personal care companies in the market, sufficient competitive constraints remain after the transaction,” PCC said.

Under the Philippine Competition Act, PCC is mandated to conduct a review of mergers, acquisitions and joint ventures of firms across all sectors, including global companies with presence in the Philippines, to ensure such will not put to risk consumer interest.

PCC has so far, approved 182 out of the 196 filed transactionsb with a combined worth of P3.21 trillion.